The Bloomberg terminal-peeping scandal is rich in irony. It has launched a media feeding-frenzy that could run for a while – and prove difficult for the company to manage.
In case you missed it, Bloomberg acknowledged late last week that it had taken steps to prohibit its reporters from accessing customer data following a complaint from Goldman Sachs. A Bloomberg spokesman told the New York Post:
“Limited customer relationship data has long been available to our journalists, and has never included clients’ security-level data, position data, trading data or messages,” said Bloomberg spokesman Ty Trippet.
“In light of [Goldman’s] concern as well as a general heightened sensitivity to data access, we decided to disable journalist access to this customer relationship information for all clients,” he noted.
Let’s start with the fact that Bloomberg was busted by a Wall Street bank, Goldman Sachs, itself long a target of Bloomberg’s reporters. Usually it’s the bank on the hot seat, fielding questions from aggressive reporters. Seeing the roles reversed must have brought smiles to many at Goldman (and J.P. Morgan, the Treasury Department and the Federal Reserve, who now have joined the complaints about the practice).
If that weren’t delicious enough, there’s also the fact that the New York Post broke the story, with “serious” business publications like the New York Times and the Wall Street Journal trailing in its wake.
And neither the Times nor the Journal have added much in the way of new information since the initial report by the Post. In fact, it was Buzzfeed, which started its business-news coverage just weeks ago, that was responsible for the latest revelation – that terminal-peeping was known to Bloomberg management as early as 2011. What’s more, the Times has cut its media coverage in recent weeks, only to be scooped on a media story by the upstarts at Buzzfeed.
For its part, Bloomberg has done fairly well so far in handling the crisis by apologizing to Goldman and prohibiting reporters from accessing private terminal data. Whether any individuals will be held accountable remains to be seen – another ironic similarity with Wall Street’s scandal-plagued past.
This scandal will continue if several things were to occur. The first is if the group of firms and individuals targeted by Bloomberg staffers grows. Right now it is a handful of big institutions, but it’s possible other organizations had their terminal usage data screened by Bloomberg reporters, too. If a non-US entity, like a sovereign wealth fund, foreign central bank or a national treasury office, come forward with similar accusations, the issue will be even more serious for Bloomberg.
The scandal will also run on if there is further evidence that Bloomberg management knew about these practices and did nothing to discourage them. If that comes to light, there will also be uncomfortable scrutiny for Bloomberg News supervisors and senior executives. In that case, the story’s trajectory will be very similar to the News Corp phone-hacking scandal, which has been running for years now. Of course, unlike News Corp there’s no suggestion of illegal conduct by Bloomberg officials, but it could be a very messy problem for the media group to clean up all the same.